What are the facts of project analysis
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The important facts of project analysis are as follows
Market analysis
Market analysis is associated primarily with two questions:
What would be the collective demand of the planned product / service in future?
What would be the market share of the project under evaluation?
To answer the above questions, the market analyst needs a broad variety of information and suitable forecasting methods. The kinds of data required are:
Consumption trends in the past and the present expenditure level
Past and present supply situation
Production potential and constraints
Imports and exports
Formation of competition
Cost structure
Flexibility of demand
Consumer manners and conduct, intentions, motivations, attitudes, preference, and needs.
Allocation channels and marketing guidelines in use
Administrative, technical, and legal constrictions.
Technical analysis
Examination of the technical and engineering characteristics of a project needs to be done repeatedly when a project is made. Technical analysis seek out to decide whether the fundamentals for the successful commissioning of the project has been considered and reasonably good options have been made with respect to location, size, process etc. The important questions raised in technical analysis are the following
Whether preliminary tests and studies have been done?
Whether the availability of raw materials, power, and other inputs has been recognized?
Whether the production method opted is suitable?
Whether the equipment and machines chosen are suitable?
Whether the supplementary equipments and auxiliary engineering works have been given for?
Whether provision has been made for handling of effluents?
Whether the planned layout of the site, building, and plant is sound?
Whether work schedules have been reasonably drawn up?
Whether the technology planned to be employed is suitable from the social plant of view?
Financial analysis
Financial analysis tries to ascertain whether the planned project will be financially feasible in the sense of being able to meet the saddle of servicing debt and whether the planned project will convince the return expectations of those who provide the capital. The feature that have to be looked into while conditioning financial appraisal are the following:
Investment pay out and cost of project
Means of financing
Cost of capital
Projected profitability
Break-even point
Cash flow of the project
Investment worth while ness judged in terms of a variety of standards of merit
Projected financial position
Level of risk
Economic analysis
Economic analysis is also referred to as social cost benefit analysis and is concerned with evaluating a project from the larger social point of view. In such a judgement the focus is on the social costs and benefits of a project which may usually be different from its economic costs and benefits. The questions sought to be answered in social benefit analysis are the following
What are the direct economic benefits and costs of the project measured in terms of efficiency prices and not in terms of market prices?
What would be the impact of the project on the allocation of income in the society?
What would be the outcome of the project on the level of savings and investment in the society?
What would be the involvement of the project towards the achievement of certain merit wants like self-sufficiency, employment, and social order?
Ecological analysis
In recent years, environmental concerns have assumed a great deal of importance – and rightly so. Ecological analysis should be done particularly for major projects which have significant ecological inference like plants and irrigation schemes, and environmental – polluting industries like bulk drugs, chemicals and leather processing. The key questions raised in ecological analysis are the following
What is the likely harm caused by the project to the environment?
What is the cost of reinstatement measures needed to make sure that the damage to the environment is contained with in acceptable limits?
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